Disappointing Christmas for Morrisons

Preliminary results indicate that Morrisons would have had the worst
Christmas period of the ‘Big Four’ in the UK, while analysts had
expected them to achieve the best results as they are not so dependent
on the non-food products that Britons have learnt to avoid during the
crisis.

“In line with the market”

The chain says to be rather happy with the results, as they “are in line
with the market” and that it “had anticipated that 2011 would be
challenging for the consumer and that [it] would be operating in a low
growth sales environment.” The Board’s expectations for the full year
remain in line with its original assumptions, stated the company.

CEO Dalton Philips said that “historic like-for-likes are around 3 per
cent, but with consumer confidence so low and our prediction that it’s
going to remain this low, we don’t think that we’re going to be
reverting back to those sorts of like-for-like [figures] for some time.”  Consumers increasingly bought cheaper products: almost 40% of the
products sold went out at a reduced price and one of the most popular
product this year was sparkling wine: with sales going up +156%, many
buyers clearly stayed away from the champagnes.

Analysts of Nielsen however suggested that Asda’s strong festive period
may have been a cause for Morrison’s slower growth too: “given the
reasonably high level of overlap with Morrisons it leads us to suggest
that it has competitively impacted its Yorkshire-based rival.”
(http://www.guardian.co.uk/business/2012/jan/09/morrisons-christmas-sales…).

Fears for a bad 2012

For 2012, most analysts do not expect much improvement: despite the
lower inflation, consumer confidence will remain low as many families
will have a lower income, compared to 2011. Morrisons believes this could be good for them
too, though: “Against this backdrop, our fresh, quality and value
credentials continue to appeal to a growing customer base and we are
well positioned to make further progress.”

Its CEO however is not as optimistic as its press statement: “I think
it’s going to be harder than the year we’ve just come out of. The
economy is in a difficult place and wherever you look, you see this sort
of lack of confidence.”

Morrisons also declined to comment on the rumours that the group was
interested in buying the 11 former Best Buy stores and converting them
into their new Kiddicare concept. “We have ambitions for that business
and we want to grow it, but we’ll update you when we’re ready,” said
financial director Richard Pennycook.